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TAXING TIMES: Appraising your property: Step by Step

Saturday, August 26, 2000

In February 1998, Allegheny County awarded a $23.9 million contract to Sabre Systems and Service to reappraise every property in the county. The challenge to Sabre was to figure out what the 580,000 homes and businesses would sell for without actually putting them up for sale.

The Miamisburg, Ohio, company that specializes in mass appraisals has plenty of experience. Since 1973, it says it has appraised 20 million properties in 19 states and Puerto Rico.

But Allegheny County figured to be its biggest challenge. It's the largest from-scratch appraisal Sabre has ever attempted. It would collect fresh information on every property to calculate market values.

Step 1: Collecting property data

In April 1998, the first of 150 Sabre employees began knocking on doors of Allegheny County residences. With the owner's permission, these data collectors, who received 80 hours of training and initially were paid $9 per hour, walked through homes counting bedrooms, baths and fireplaces. They determined whether attics and basements were finished, the type of heat and whether there was air conditioning. They noted about a dozen other facets of the home's interior structure that would be used to calculate its value.

On the outside, the collectors noted the home's style, construction method, the number of stories, outbuildings and garages and whether the driveway was paved. They sketched the home's exterior and measured its dimensions to calculate square footage -- a key component for any appraisal but something that had not been measured in earlier appraisals by Allegheny County.

On average, each data collector visited 20 to 25 homes per day.

When property owners weren't home, which was about 60 percent of the time, collectors left mailers on doors with questions about the home's interior. The mailers also included a phone number for homeowners who wanted a collector to return to look inside. Homeowners who didn't want data collectors inside -- about half the people who were home declined to let them in -- were asked questions about the home's interior at the door.

When homeowners declined to cooperate, data collectors used other means to calculate square footage and what was inside. They asked neighbors for help. Similar homes in the neighborhoods often gave them clues. Chimneys were a good indicator of fireplaces; standpipes on the roof suggested the number of bathrooms. To ensure these homes were not underappraised, collectors were instructed never to underestimate what might be inside. All property owners would have a chance to correct the data later.

Information gathered from the outside was the most important for the appraisal. Data about the interior of the house usually accounts for about 10 percent of its appraised value.

Step 2: Photos of homes, businesses

Sabre employees with digital cameras traveled separately through the county to take pictures of every home and business. This photo was included with the other information gathered by data collectors.

Step 3: Commercial Properties

A separate team of 25 data collectors specializing in commercial properties visited businesses and manufacturers. They requested income and expense information because commercial property appraisals factor in the income a property generates. Like residential data collectors, these Sabre employees used estimates to help determine a commercial property's value if owners declined to provide information.

Step 4: Checking it twice

Sabre has systems to double check its work at each step during the appraisal process. For instance, after data collectors visited their first 100 residences, supervisors randomly returned to 25 of them to double check data recorded on property cards by collectors. Collectors who weren't accurate were retrained or let go. Supervisors continued to recheck 4 percent to 5 percent of the data collected to help ensure accuracy.

Step 5: Determining market value

Sabre employees transferred data from collectors' property cards to computer files. Once all the data was in the computer, checks were run to see that completed data on each property had been properly entered.

The data was printed on forms and mailed to property owners beginning in February of this year so that they could double check its accuracy and mail corrected information back to Sabre.

Step 6: Determining market value

Certified Pennsylvania property evaluators stepped in next.

Using computer programs, they examined the prices of homes that had recently sold to determine the market value of similar homes in the same neighborhood or in neighborhoods with similar characteristics. This is called the comparable appraisal method.

Identical homes in different neighborhoods can have very different market values. So, as part of its reappraisal, Sabre identified 2,000 neighborhoods in Allegheny County and the sales characteristics of each to help ensure that property comparisons would result in accurate values.

Evaluators also calculated what it would cost to build the home at today's prices, an appraisal method called the cost approach. After calculating the cost, they then depreciated the property based on its age and condition.

For about 90 percent of the properties, the comparable and cost approaches came within a few percentage points of each other. The evaluator then used sales data from within the neighborhood, coupled with his own training, to determine the market value of the property.

For about 10 percent of the properties, the comparable and cost approaches produced values that were different by 10 percent or more. In these cases, appraisers revisited the properties to recalculate values.

For some unique residential properties, the cost approach was used exclusively. A mansion in Sewickley Heights, for example, might not be comparable to other nearby properties that had recently sold.

Step 7: Final check

As a final check, evaluators returned to all communities to check appraisals against actual properties.

Step 8: Notifying property owners

Starting yesterday, Sabre began mailing these still-preliminary values on properties to property owners, who will have a chance to question Sabre's methods and conclusions through a phone call or an informal review with a Sabre representative.

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